Latest / AST SpaceMobile Podcast / Anpanman - Conviction Over Chaos: Navigating the Space Sector Pullback

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Anpanman - Conviction Over Chaos: Navigating the Space Sector Pullback · AST SpaceMobile Podcast

0:06
This is the AST Space Mobile podcast.
0:10
It will just basically turn your phone and be seamless,
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regardless of where you are. We don't want the user even to
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know that it's connected by satellite.
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Listen, the opportunity that we have is very, very, very large.
0:28
Hey everyone, thanks for joining.
0:30
Figured I'd just fire up a midday space and just talk about
0:35
some of the volatility today, which is not unexpected.
0:40
I think there's, there's been some, I think it's been
0:43
consensus among institutions that perhaps we'd experience
0:46
some type of pull back in February.
0:47
And, and here we are, we're getting pull back.
0:49
And I think it's important to put everything in context where
0:53
the sectors that you and I invest in are up quite a lot
0:57
this year and they were up a lot last year.
0:59
And so it's natural to have some of these pull backs.
1:02
I had talked about this, this idea of knowing what you own
1:08
being important. Because I think when you look at
1:13
these periods of volatility, which, you know, I mentioned for
1:17
institutions, especially for hedge funds that are, and, and
1:20
in particular pod shops where you've got teams of portfolio
1:26
managers and analysts that are managing some capital and have
1:28
really tight risk limits and they've got to manage, you know,
1:32
factor risks as well. Days like this are, are bad for
1:35
them, right? And so you're going to have,
1:37
because they're running leverage, you're going to have
1:39
exaggerated moves where people have to de risk and things start
1:41
moving down. It also doesn't help that you
1:44
have Bitcoin, which I haven't been invested in in a long time.
1:49
The last time I ever grown Bitcoin, I think I sold at
1:52
64,000. My average was like, true story,
1:56
I think my average was like 5000.
1:58
And I held the entire way and sold what was at that point a
2:02
near term top. But yeah, crypto selling off
2:06
with Bitcoin at 73,000, which is lower than when Trump entered,
2:11
you know, the presidency. That's not good for risk assets
2:14
because the end of the day, like all this stuff is to varying
2:19
degrees correlated. And so there's going to be
2:22
investors out there, if you can imagine who have some space
2:25
exposure and maybe some crypto exposure.
2:27
And if they're getting hit on one thing, then they might be
2:30
more apt to sell the thing that they're up in.
2:33
And and so that, that's what typically happens when you have
2:37
sell offs where correlations mean Co movement goes to 1,
2:42
where everything kind of moves together because you have people
2:46
who are selling one thing to stay alive or to cover margin.
2:51
And, and that's why you'll see assets across the board sell
2:55
down. And so for example, T1 Energy,
2:58
which I'm involved in, that's off quite a bit.
3:01
And you know, ASD space mobile's off quite a bit.
3:04
Those are two big winners. But if you look at across
3:08
whether it's space industry or some of the other high beta
3:11
names like next generation nuclear names, they're all down
3:15
pretty much the same levels. I mean, for Q1 energy, that
3:18
one's down 17 half percent. And another favorite, which is
3:21
focused on batteries is EOS and that's down 70 half percent.
3:25
So not, not anything out of the ordinary.
3:29
And you know, I think as people on Twitter always look for
3:35
something to explain the move. Sometimes you just have a
3:38
healthy pullback. And so of course, there is some
3:41
concern about for the potential for conflict on Iran and those
3:45
headlines didn't help earlier today.
3:47
But you know, I think what sparked the recent pullback has
3:50
been in tropics like new software tools or and and
3:56
concerns that people have around software names in general that
3:59
AI perhaps is going to disrupt that entire industry.
4:02
And so I was just looking at the soft software ETF and that thing
4:07
has been an absolute disaster. I think it's almost at a point
4:11
now it's almost about to reach the label the the levels back in
4:17
April 2025 when there we had those tariff scares.
4:21
But but yeah, like I said before, you know, as you get de
4:25
risking in a heavy way in one particular area of the growth of
4:30
growth in in the markets, then it can kind of, you know,
4:33
trickle into other areas as well.
4:35
So today's not out of the ordinary.
4:38
And I think as I said before, it's important to know what you
4:40
own because often times, and I'm guilty of this too, like if you,
4:44
if someone like presents you an interesting idea and you know,
4:48
you, you, you take a look at it, or sometimes you don't, you
4:51
might just, it sounds good enough and you just buy a small
4:53
position. Then whenever volatility hits,
4:57
that position is usually the first one that you sell because
5:00
you don't really know much about it and it's not something that
5:03
you have conviction in. And you know, maybe it was just
5:06
a trade, but then you, you know, at the, at the first sight of
5:10
volatility, you might hold on to it.
5:13
But then if things go down even further and your portfolio is
5:15
taking a pretty big hit, then you might then.
5:21
So there's quite a few people when you look out on Twitter,
5:24
there's like these traders and they'll, they'll be in a
5:27
position they're down 1020% on, on a particular name.
5:31
And like, oh, this is bad something, you know, the company
5:34
needs to do something. And you know, they blame
5:36
everyone but themselves and then they sell and they lose money.
5:39
And that's the big difference for folks who actually
5:43
understand what they hold. And so.
5:45
If you have a. Drawdown of 10/15/20 percent,
5:49
you are more likely to hold that position and if anything you're,
5:52
if you liked it at you know a price of let's say 130, you're
5:57
going to love it at 100. And so when you actually
6:00
understand what you own, that might give you the conviction to
6:04
add. At their at.
6:05
Those times during a drawdown or at least toll.
6:08
And so, you know, I was. Joking with someone, there's
6:10
like a few people on the ASTS hashtag hashtag where they, they
6:16
talk about you know that they're down and, and this is bad and
6:22
they're selling out and, and that's what we call like
6:24
negative gamma when if you don't know something, you end up
6:28
buying it high and then you and then you end up selling it low.
6:32
And so you, you don't do yourself any favors by losing
6:36
money on those types of trades where where you don't really
6:39
understand what's going on. So, and then I got this other
6:43
guy. Let's see Tim Stabrowski, the
6:45
news about AT&T choosing Amazon Leo for a fixed satellite
6:47
Internet is contributing to this.
6:50
No, that's not Tim. I hate to break it to you, but
6:54
the entire sector let's. So let's take a look.
6:56
For those that don't know, AT&T announced A partnership with
6:59
Amazon Leo. They are going to use Amazon
7:02
fixed wireless to to then connect enterprise customers
7:07
that are far away from fiber coverage or wireless coverage.
7:12
And so it's a very different, you know, market and obviously
7:15
Amazon Leo is complementary to what AST space mobile is doing.
7:19
Imagine Starlink fixed wireless to home and then Starlink direct
7:23
to sell. Those are two different things.
7:25
Amazon Leo is competing with Starlink direct to home, you
7:28
know, fixed wireless. And so that that news today,
7:32
some people were trying to point fingers like, oh, that's what's
7:34
causing the stock price to be down.
7:36
I don't think so. I mean, I guess perhaps at the
7:39
margin for some people who don't really understand the company
7:42
who who own it, but they don't understand it.
7:45
I guess, you know, some people may have sold, but if you look
7:47
at the space sector, I mean Rocket Labs down 14%, right,
7:51
Wires down 13 Planet Labs 13, Intuitive Machines 17%, Carmen
7:57
15% even like some of these popular defense names like
8:01
Kratos, which does some space stuff too, is down 15%.
8:04
So again, like people are going to try to find reasons why a
8:08
stock price is down. But yeah, it's the market is
8:12
down the all the growth names. I mean, you look at some of
8:15
these quantum names, Ion QS down 11 1/2%.
8:19
Rigetti is down 10%. And so it's not, you know, it's
8:24
not just space companies. I mean, So what was interesting
8:28
is Jim Chanos, who's been pretty negative on data centers because
8:32
he thinks it's a bubble. He, he, he threw a bomb today,
8:37
or maybe it was yesterday, but he tweeted that, Oh, if these
8:39
data centers in space become a reality, then then there's no
8:42
terminal value for data centers on on earth, which makes a zero
8:46
sense to me. It could crimp some of the
8:49
potential growth, but but we're we're far from that like the.
8:53
As I mentioned before yesterday. The the cost per kilogram has to
8:57
come down quite significantly for space data centers to be
9:01
competitive with data centers here on Earth.
9:05
But that said, you know all those names are down huge, like
9:09
Cipher's down 19%, Irons down 17% Mar 11, NDIS is down 12.
9:17
And so, yeah, there there's, I mean AMD, which.
9:22
Which beat and then raised guidance for next year or sorry
9:26
for the next quarter, although that didn't meet the wild
9:28
expectations that people had or the whisper number, I mean
9:30
that's down 16 1/2%. And so I think today is pretty
9:35
healthy. You have some profit taking and
9:37
consolidation. You know, one of the things to
9:41
look out for in terms of market sentiment.
9:43
And I was thinking about this the other day.
9:46
I didn't tweet about it. Which maybe I should have but.
9:49
When people start coming up with new ideas like, OK, there's like
9:53
for example, I have, I mean I have an investment in Kraken
9:56
which does, which provides, you know, sonar aperture and also
10:02
battery systems for underwater, underwater unmanned vehicles.
10:08
And so that's a pretty interesting company.
10:10
I think it's great to own like a merchant supplier of the the
10:14
guts basically for all these UUVS which are going to
10:16
proliferate. But but then, you know, on
10:18
Twitter here, there was like some tweets over the past two
10:22
weeks where it's like, hey, check this new stock out.
10:24
This is the next Kraken or for AST too, It's like, hey, here's
10:27
the next space stock. It's the next AST or Q1 energy.
10:31
Here's the next one, the next thing that's.
10:34
You know, like Q1 energy and when you have that type of
10:39
euphoria. To, to look for like the next
10:43
best thing and, and, and I'm not like poo pooping any of those
10:46
ideas, but that kind of gives you a sense of where the market
10:49
is in terms of euphoria and perhaps being overextended
10:53
sometimes. And so you know, similar to the
10:57
bottom indicators that we talked about, sometimes there are these
10:59
top indicators where. If people are euphoric.
11:02
And every idea is working, then maybe it's time for the market
11:06
to pull back. And so I think we're seeing some
11:07
of that now. And so, you know, today I, I
11:11
talked about how I, I bought some ASTI, bought some upside
11:16
and some stock as well. And T100, I did the same,
11:18
Especially, you know, down here I added and.
11:23
You know the I one other thing I wanted to talk about is the
11:27
fact. That, you know, people are like,
11:27
well, how do you have this endless amount of capital?
11:30
I, I don't, I actually have limited capital, but I do trade
11:35
around a small part of My Portfolio.
11:38
And so I think I, I mentioned before, like up to 5%, it's
11:42
really even smaller than that. It's more like typically I may
11:45
trade around two 3% if that. And that usually would be in a
11:52
tax advantage account that I have where the implications are
11:54
not as punitive because you're obviously, if you're, if you
12:00
have capital gains, you've got to pay taxes on.
12:04
I'm recognizing those. And, and the, you know, I, I
12:08
will trade some of my cash position around as well.
12:10
But typically, you know, for HD space mobile, for example, like
12:13
I don't, I'm not touching well over 90% of that position
12:16
because it, I have a very low cost basis.
12:19
If anything, if I do sell, it will be in the tax advantage
12:22
account. But more often than not, I'm
12:24
just not trading that position. Now from time to time I'll trade
12:27
options and I might trade some stock, maybe a few 1000 shares
12:30
here there, which I've tweeted about.
12:33
And sometimes people are like, well, you never sell and.
12:35
I don't really. Advertise when I sell stuff, I
12:37
mean, today for example, I did, I did tell people like, oh, I
12:40
have this small position in power bank and I actually ended
12:43
up selling it 'cause I wanted to consolidate it down into ASTI.
12:46
And so I, I mentioned that, but I, I don't, I guess one thing I
12:50
didn't want, I don't want is for people to think that I'm a
12:54
really active trader and I'm just like whipping massive size
12:57
around, which I'm not, I'm usually a, A, you know, buy and
13:02
hold person. And from time to time, like I
13:04
will monetize options, for example.
13:06
And so I guess it was like a few weeks ago, I had a, an AST, you
13:13
know, speculative option position, which did quite well.
13:16
And the proceeds from that was like, you know, you know, a few,
13:20
a few $1,000,000. And so I, that's when I bought
13:23
stock back in history because it's like, oh, I was able to
13:26
increase the stock that I have in the company and, and so.
13:30
I will have. Some trading positions, you
13:33
know, I'll talk about little speculative ones, but generally
13:36
speaking I'm not, I don't really trade entire positions around
13:41
and so, but yeah. And I I don't want.
13:45
People to think like I'm giving signals.
13:47
Of this is what I'm going to sell.
13:48
This is what I'm going to buy And and I typically, I mean, I,
13:51
I it's kind of in a joking way, but in fact too, like when I
13:55
tweet out like, oh, I bought the dip.
13:56
I actually do buy those dips, but I just don't Telegraph like
13:59
when I might sell some things and I don't know, maybe I should
14:03
at some point. But, but more than anything,
14:07
like I'm really just focused on fundamental research and just
14:10
sharing news about ideas and, and my levels of conviction for
14:14
those ideas. And so I try to stay away from
14:16
like being one of these guys who give signals of when to buy and
14:20
when to sell. But yeah, the I will say for,
14:25
for what it's worth, like, you know, some, some of us, we
14:27
talked about Reddit and the ASD space mobile Reddit when it gets
14:32
really negative and when some of the long standing bears get up
14:36
votes, then that's usually a pretty good bottom indicator,
14:39
just like the coop bottom. And so I think those from what I
14:43
understand, I haven't looked at the Reddit today, but someone
14:45
was telling me that it's flashing all the indicators.
14:48
And so the sentiment there I think is pretty bad, which
14:51
usually means like we're pretty close to a bottom or tradable
14:54
bottom, if that so. But yeah, I think as I as I was
14:59
saying. Before I mean today this we're
15:02
having a lot of big moves. I mean, I was just looking at
15:04
the factor in Bloomberg and value is up like 2% dividend,
15:09
you know, dividend yield stocks are up 1.8%, companies that buy
15:12
back shares 1.6%. And then momentum is down five,
15:16
4 1/2 percent, growth is down 2 1/2%, three month EPS provision.
15:21
So companies that keep revising up earnings that's down 2.2%.
15:25
And so yeah, there's, there's a lot of factor movements today
15:30
and you know, it's, I think I think it's pretty healthy.
15:34
And for an individual investor, it's important like he, you
15:40
know, pounded the table on this, like do not trade or invest in
15:43
margin, stay within your means. Just have a cash account, like
15:48
don't you know, obviously sometimes you got it's good.
15:51
I have a margin account and you need that facilitate stuff like
15:54
if you're exiting something or you want to buy something ahead
15:57
of time. But I don't really run margin
15:59
and quite candidly, I could. I can't run margin because I, I
16:03
permanently have my assets at E*Trade and, and funny enough,
16:07
like they, they give you no margin relief on companies like
16:12
ASD space mobile or T1 energy. So they actually keep me from
16:15
doing bad things even if I wanted to do bad things.
16:18
And so that's good. I, I also have an account at a
16:21
high touch broker and they actually let me margin ASD, but
16:24
I would never in a million years dream of doing that.
16:26
Because the thing about margin and I've talked about this, you
16:30
know, it's, is that it can be a good tool if used very
16:34
judiciously and at right moments.
16:36
Meaning, you know, you, if you really think you have edge or
16:39
you think there's a big price dislocation that you might
16:41
utilize margin, but you've got to be very disciplined about it.
16:44
You got to have an entry point, exit point, or if it's if, if it
16:48
goes against you, you're going to close out.
16:50
Last thing you want to do is be on margin for extended period of
16:54
time. And then I think you get you
16:56
eventually get, you know, tapped out because using margin against
17:01
high beta stocks is the rest is the quickest recipe for a ruin
17:05
because you're you know, things will go well.
17:07
But then I mean, think about all the crypto traders who were long
17:10
leverage along Bitcoin at one 2100 and it just kept going down
17:14
like they got fully liquidated and lost more than they, you
17:18
know, then they probably expected.
17:21
And so I think it's important to stay away from margin.
17:23
And the reason why you do that is for days like today where
17:27
yeah, things are down and it sucks, but it's not as if you've
17:30
got to meet some margin call and hopefully you have some capital
17:33
laying around and you're able to take advantage, right?
17:36
Because for those hedge funds that are running really tight
17:40
risk limits, they've got a de risk degrows and that's why you
17:44
see these outsized moves and volatility as an individual
17:50
investor where you're not reporting to LP's, where you
17:52
don't have margin, you can be on the offense, you can take
17:56
advantage of some of these dislocations.
17:59
And obviously in in particular names that you understand very
18:02
well, you have a, a good fundamental point of view and
18:06
you believe you know 8 if you would joke about it.
18:10
But if you'd like to stock at 100, you're going to love it at,
18:13
you know, 90. And so as it moves down for any
18:17
investor. You hope for.
18:19
The ability to buy even lower, right?
18:21
And so, and the other thing I would mention is that in days
18:25
like today where let's say you had a, let's say you had like,
18:30
I'm just making numbers up, you had $100 in a low conviction
18:33
name, you had $100 in the high conviction name and, and both
18:36
are down or your high conviction name is down 20%, the low
18:39
conviction name is down 25%. Or you can use days like today
18:44
to consolidate your position. You can sell the low conviction
18:47
thing that's down 25 and then you buy more of the high
18:50
conviction thing that's down 20. And so in that regard, you're,
18:55
you're upgrading the positions that you hold, right?
18:58
And so that's, that's also another way to take advantage of
19:02
volatility. I mean, I'll be honest, like
19:04
today I'm very tempted, like I have these Vodafone calls, these
19:09
LEAPS 2027 that are $15 and $17.00 calls that are up 3 1/2
19:14
and three times. And I'm very tempted to monetize
19:17
some of those and deploy elsewhere.
19:19
But then I, I'm still, I still have conviction in that trade.
19:23
So I'm going to continue to hold it.
19:24
But I don't know, there, there might be a time, you know, we're
19:29
down today, but we could be down tomorrow and down the day after
19:32
that. And there might be a time where,
19:35
you know, I break the glass and monetize some of those to deploy
19:38
elsewhere. But, but yeah, it's I, I think
19:42
in days like today, it's, it's just a, a reminder that you, you
19:46
know, celebrate the good days, but you also have to be prepared
19:48
for the big draw downs. And what's funny is I think some
19:52
of these accounts that are on Twitter, maybe it's for
19:55
engagement or, or whatever it is, but you know, they'll,
19:58
they'll, they'll celebrate that you're down.
20:02
And they'll say I told you. So they'll do all these things
20:05
to, I guess, try to make you feel bad, even though they're
20:07
trying to make themselves feel good.
20:09
But it's funny because like, I don't think any of the, and, and
20:13
I'm talking about like AST in particular or even this applies
20:16
to you on energy, like for people who bought it too, or AST
20:19
from people that your average is $5 or $6 or $7.00.
20:24
These people are trying to, you know, take the piss out of you.
20:26
It's like, I don't care. I don't care.
20:28
Like there's yes, I I think someone was saying, well, given,
20:31
you know, potentially the charts if there's if this continues,
20:35
the stock could go to 70. Yeah, it could.
20:37
If if the end world ends, all stocks go to zero, I get it.
20:42
But I have conviction in this and I'm a long term holder and
20:46
this is just a feature. This is part of, you know, if
20:49
AFC was down 30 or 40% while other stocks were down 10%, then
20:53
yeah, there there's certainly a problem because there's
20:57
something company. Specific that's going on.
21:00
But if the company is down 13% and the guitar sector is down,
21:03
let's see anywhere between 11 and 18%, that's just beta.
21:10
It has nothing to do with the company.
21:11
It has everything to do with just risk off across the sector.
21:15
And so I think it's important, especially for these people that
21:19
are fixated on why is a company moving.
21:23
It, you know, in particular without kind of, you know,
21:26
looking at that in a vacuum, without looking at the rest of
21:29
the sector, yeah, the entire sector is down.
21:32
It's just part of being invested in space.
21:35
And so I think as I mentioned before, I I do think space
21:40
overall is going to be and is a huge theme for this this year.
21:45
And so for those people who. You know have.
21:47
Been sitting on the sidelines or may have missed it like not here
21:50
it is here's here's a an entry point you know can things go
21:55
lower? Sure, but if you're looking to
21:57
invest, you know, this is probably a good place to start.
22:01
And I think the, it's important to understand what your time
22:04
horizon in because someone mentioned, you know, don't,
22:06
don't invest money that you can't afford to lose.
22:08
And that's true. And it's almost like real
22:11
estate, like in New York or California, which is where I
22:15
lived before as well. You you have this thing where if
22:20
you're, if you buy a home. And it doesn't matter any part
22:23
of the cycle if you buy a home, if you have a one or two year
22:26
view, then you certainly could be buying the top.
22:28
But if you are living in any of those markets for at least five
22:32
years, any purchase, whether it's at the top or it's in the
22:35
middle or maybe it's even at the bottom.
22:37
Obviously in the bottom would be ideal.
22:38
But if you have a five year. View you're going to be fine in
22:42
New York or California real estate because that that
22:44
typically is going to perform no matter what even through various
22:48
cycles right and so I think we get the same thing if it can be
22:52
applied to, you know, stocks that could have good fundamental
22:56
outlooks with significant opportunity.
22:59
Yeah, you might buy something at the top and you, you know might
23:04
be down 10 twenty 30% and that doesn't feel good.
23:07
But if you're looking at things on a long term basis, you're
23:10
going to be fine. And I think I I remember like so
23:15
many conversations with people when AST was trading at six and
23:18
it went to seven and eight and they're like, Oh my God, I
23:20
missed it and, you know someone bought it 12 and then it drew
23:23
down to like 10 and they were angry with themselves and now
23:27
look back I mean it's yeah, it's like the company, you know today
23:34
is moving more than the entire stock price was back then.
23:36
And so I think it's good to to have perspective and just, you
23:42
know, put when you're when you have days like this, sometimes
23:46
the best thing to do and yeah, I mean, you don't even have to do
23:49
anything that sometimes the best thing is just not do anything.
23:53
But anyway, I'm going to see, Oh, the other the other point.
23:59
And if anyone has questions or comments, feel free to leave
24:02
them in the in the in the comments below.
24:04
But the other thing is that when you do have these periods of
24:09
draw down the, the stuff that work is working like kind of the
24:13
marginal ideas, like often times those will get hit pretty hard.
24:17
And so, so yeah, it's important to remember like if you if you
24:20
have a portfolio and you have a bunch of marginal ideas and
24:25
they're quick trades, you got to be careful because like in
24:29
periods of big draw downs where you don't really know those
24:32
names well and they're not high. Conviction.
24:36
Those can hurt you, right? Because then those are the ones
24:39
that you'll you'll have this draw down and then you Kick It
24:42
Out because you really don't understand the name.
24:46
And then yeah, you feel bad afterwards.
24:48
And that's capital that can be used to apply to more high
24:52
conviction stuff. But, but like I said, you know
24:55
that also when you do have these draw downs and the good and the
24:59
bad names are going down for any of those, it's almost like you
25:03
can. Correct your mistakes.
25:05
You can sell some of the lower conviction stuff and consolidate
25:08
into higher conviction names. But anyway, let me see I.
25:13
Don't know if there's any comments here.
25:16
But yeah, today. I I guess for what it's worth,
25:19
like I bought some AST, you know, some I bought a little
25:22
early, but then I bought on the way down.
25:26
I added some upside as well. I bought some T1 energy.
25:30
I bought a little bit of Bridger and some some Strata critical as
25:34
well. These are all names that are
25:36
been falling for quite some time.
25:38
I also added a little bit of Velo which is a very small
25:43
specular position but. That thing is so volatile that
25:46
that's one name that I just like pretty much trade around.
25:51
And yeah, and I, oh, I did add some Kraken as well today, which
25:55
it's finally come back down a bit.
25:58
But anyway, yeah, that's. That's all I had to say pretty
26:03
much. I'm going to see if there's any
26:06
questions or comments. Just look here.
26:15
Here's a question to tap into your institutional perspective.
26:18
What constraints, what constraints do funds face to
26:22
load up on risk in these moments?
26:23
Does retail have an edge in these moments?
26:25
What constraints do they have? Well, if you're a hedge fund,
26:30
I'm just talking about like a typical large multi strategy
26:33
fund that has pods. Pods will be a port loader
26:38
manager and maybe one or two analyst or or it could be a
26:40
pretty big team, could be like 10 people.
26:43
The constraints are that, you know, can they load up risk in
26:47
these moments? Well, I mean, the overall market
26:49
indices aren't down that much, but then high beta names are
26:52
down. Quite a bit.
26:54
And so the constraints are that that fun might that that pod may
26:58
be down one or 2% already. And so do they take?
27:02
Do they take a chance and and? And by the way, they.
27:07
Might be, you know, maybe 80% deployed versus their risk
27:10
limit, but do they as a portfolio manager, you know, is
27:14
this going to last? Is there going to be more of a
27:16
drawdown and if so do I buy now and and then a?
27:22
Further drawdown happens and I make things worse or.
27:25
Do ID risk today to live another day and see if things get worse
27:30
tomorrow or the day after and then maybe I can, you know,
27:33
deploy. And so it's it's pretty tough.
27:36
I mean, 'cause there's, it's almost like damned if you do,
27:39
damned if you don't type of thing where these, these guys,
27:43
they're. Probably down quite a bit.
27:44
I mean imagine like the big hedge fund names that everyone
27:49
was in. I mean it's.
27:50
It. There's probably a whole host of
27:52
software names that hedge fund zone which they're getting
27:54
absolutely clobbered on. And so, and yesterday, if they
27:58
were long, you know, part of the book software names and they
28:01
were short, which, yeah, I, I don't know how many institutions
28:04
are short space stocks. I mean, clearly there's pretty
28:06
decent short interest. But if they were short space
28:09
stocks, they got completely rained yesterday, right?
28:11
And then say when space stocks are down, they're like, oh,
28:14
great, you know, this space stocks are down, so my shorts
28:16
are working. And then they look at their
28:18
software names, which are down again.
28:20
And so they're in a bad place, right?
28:22
And so when you're an institution and this is on the
28:26
hedge fund side, it's tough because you have to, you have to
28:30
make good moves every single time, right?
28:32
There's a very limited room for mistakes.
28:37
And if you have drop down limits of, you know, at some firms they
28:41
supposedly say, oh, you can you have a draw down limit to 12% or
28:45
10%, which is pretty high. You might have an initial
28:49
drawdown limit of 5% and then they cut part of your capital
28:52
and then 7% they cut. And then after maybe 10% you're,
28:57
you're basically done, you're tapped out.
28:59
And if you can imagine like your own portfolio, how much
29:02
obviously you're not running a market neutral book.
29:04
You're probably just long a bunch of high beta stuff.
29:08
Being down 5 to 10% is pretty easy just in a day or two,
29:11
right? And so imagine working under
29:15
those constraints. Obviously you're going to be
29:17
short stuff, which usually will work for you, but sometimes
29:20
you're on the wrong side. You might your lungs might be
29:22
getting clobbered and shorts might be going up in your face.
29:25
And so that's why managing money on the hedge fund side is, is
29:29
really can be really difficult and it's very stressful.
29:32
And so days like today where it's like, oh, me, Joe Schmo
29:36
with the individual port flow, that's not a margin.
29:40
And have some cash laying around, I can go deploy or if I
29:43
want to, I can dial up risk. The way you might dial up risk
29:46
is if you're in, I'll just make one, you know, if you're in AST
29:51
space mobile, you might sell some stock and then you, you buy
29:54
some calls with that capital, right.
29:56
And so that's one way to. Dial up risk.
30:00
While not having you may not have any funds laying around,
30:02
but you monetize from your position to dial up risk.
30:04
I'm not saying that's what you want to do, but that's one way
30:06
to do it. Or, you know, you might sell
30:09
some low conviction names and buy higher conviction names.
30:12
You know what, whatever it is, right?
30:15
But for you as an individual investor, it's not like you have
30:18
a risk manager look over your shoulder and you got to worry
30:21
about people on your team like keeping their jobs, all these
30:24
things. And so it's very stressful.
30:26
It's not I, I don't envy anyone in the industry, but you know,
30:30
if you're, if you're young and, and you know, you're good at it,
30:35
then it's great. And it's a great way to learn
30:38
investing and, and obviously people can and do make quite a
30:42
bit of money, but it's also super stressful and you age very
30:47
quickly. And so I don't, I don't miss
30:49
that industry at all. I'm having more fun doing this
30:53
and hanging out with all you guys.
30:56
But yeah, in moments like this there there are times by the
30:59
way, like if you have a huge market crash and at the CIO of
31:04
the firm is in in their chief risk officer is managing that
31:07
for. Or improperly they may go out to
31:09
PM and say hey. You know, then this, this may
31:13
this, you know, whether it was like the US getting downgraded
31:16
the credit rating, this is like back in 2012, the tariff
31:19
announcements, which for the astute hedge funds, they were
31:22
like, OK, this is the time to go on the offense, right?
31:24
Like this is an overreaction by the market.
31:27
They may come back. You might get an order from up
31:30
high to say, hey, deploy risk now because we think this is a
31:34
good opportunity to take advantage of dislocation, but.
31:40
But yeah, it's. Tough.
31:41
It's not easy and in in a time like this, as a hedge fund
31:46
manager, a portfolio manager, you have to make.
31:49
You got to weigh your. Decisions like do you go on the
31:51
offense now or is it too early? If you're down already a few
31:55
percent and you're getting close to your risk limits, do you, do
31:58
you take that risk and deploy now or do you cut risk and live
32:03
to fight another day? And So what, when people get
32:07
their capital cut, that's, that's pretty bad.
32:11
Because if you imagine, let's say you're running a book
32:13
that's, I don't know, $500 million and then you're down 3
32:17
or 4%. And then you know, you're,
32:21
you're pretty close to your risk limit of getting your capital
32:24
cut. So let's see, let's just say
32:27
you're down 5%. So you're down $25 million and
32:30
if you go another 2%, let's say like you know, you get your
32:35
capital. Cut in half.
32:37
Right. So let's see.
32:41
So if you were down, let's say you're you're down 37 and a half
32:44
million dollars, you get your capital cut to 2:50.
32:47
So it's hard to dig out of that hole.
32:49
Like if you're down 37 and a half, $1,000,000 and you only
32:53
you're only working with 250 million of capital, then that
32:57
watermark is really hard to get over.
32:59
And so that's why it's almost like the guys, the hundreds of
33:05
teams that a Millennium or Citadel will go through, only
33:09
very few will have longevity. And those are, you know, there
33:13
you almost have to be a psychopath.
33:16
To make it. Through and that's that's by the
33:19
way, like these large multi strategy firms, not everybody
33:23
operates this way. And and of course you have hedge
33:25
funds that are not multi strategy and they might be more
33:29
like a small family, more operating like a family office
33:33
or something. But but yeah, that's, I mean,
33:36
it's and that that's why you see exaggerated moves in stocks
33:40
sometimes when when risk overall is getting de gross.
33:43
De gross means if a hedge fund is running at 2-3 times leverage
33:49
and things are not working for them, they might tell that the
33:54
people who make investing decisions, it's time to degrows.
33:57
Degrows meaning we're going to go from three times leverage.
34:00
So if you had $500 million like of AUM that you're managing and
34:05
the fund is deploying 1.5 billion of long and shorts,
34:08
that's that's three times leverage.
34:10
And they're like, hey, we're going to degrow because things
34:13
are not going well and I want you to D gross by one turn.
34:18
So we're going to go from 1.5 billion to 1 billion of deployed
34:21
capital. That means you're covering your
34:23
shorts and you're selling your longs, right?
34:25
And and so that means liquidity in general is coming out of the
34:28
market. And that's why some some days
34:31
where things are pretty bad, you'll see.
34:34
Short, heavily short names up on that day and and of course pop
34:38
their names down because often times that's hedge funds that
34:41
are covering their shorts and they're selling their longs.
34:45
And so, you know, for example, in the financial crisis, there
34:48
were many days like that where it's clear some hedge funds were
34:52
de grossing or sometimes it's just one hedge fund.
34:54
Like you'll see one, you'll see moves exaggerated in a handful
34:59
of games. And it's because, Oh yeah, that
35:00
that fund is, is de grossing or, or they're in big trouble.
35:05
And I remember in 2008, that's like when that was part of the,
35:09
that was the soup du jour. That was the soup of the day
35:11
where people would look at holdings of various hedge funds
35:15
and, and go attack them, right? Like if you knew that some hedge
35:20
fund was, was not doing well, you might go see what their
35:24
lungs were. And and of course, you know, you
35:26
heard like them pitching their shorts.
35:28
And then people would try to induce more pain and profit from
35:32
that, which is, which is kind of crazy.
35:35
But that's I mean on the flip side of that you also from a
35:39
risk management point of view you would do that.
35:41
To save your own ass cuz it's like.
35:43
OK, do we have a roll up with that guy?
35:45
And if we do, we need to get out of their selling cuz if they're,
35:48
if that place is shutting down or they're in trouble, I don't
35:51
want to hold the same things they're holding.
35:53
And so, so people went through that, that, that analysis.
35:59
But let me see, there's the other comments here on these
36:06
larger drawdowns. Does it make sense to move some
36:08
shares into leaves for a little extra juice?
36:11
Yeah, it can. It you could certainly do that.
36:14
But of course, like you've got to have a point of view, like
36:17
you have high conviction. You think this is the right
36:19
level to do it. And so you might do a lot of
36:22
that. And by the way, like it's, it's
36:24
not a binary thing. It's not like I'm going to sell
36:27
my entire position and put it all into this.
36:29
You can do something small like just and sometimes it's, it's
36:32
good on days like this where it's like, well, I, I don't have
36:36
conviction to do anything, which is fine too.
36:38
Or to make myself feel better, I might do 1 or 2% or 3% of my
36:44
position just to feel like I've done something and mentally have
36:48
this like this check mark that on that day I did something and
36:53
it and it was good. Or it could.
36:54
Of course it could end up being bad, but.
36:57
But I think. On larger drawdowns with this
37:00
person saying, you know, sell some shares and own LEAPS for a
37:03
little extra juice, yeah, you could do that.
37:06
It's but just though that you know, you're increasing your
37:08
risk. And then of course for LEAPS
37:10
depending on if they're in the money or out of the money, you
37:14
know, it's a different trade than than obviously owning
37:16
stock. Let's see Francisco didn't add
37:19
Rocket Lab. No, I did not add Rocket Lab,
37:22
although it is tempting, but I'll let you know if I do.
37:26
I by the way, I have I haven't really held Rocket Lab.
37:29
I've, I've owned it from time to time, but for me, you know, I
37:33
have the highest conviction in ASD spaceball.
37:36
It's not a knock on Rocket Lab, but, but I think these stocks
37:41
have such high correlation in relationship to one another.
37:44
If you own one, it's almost like you own the other.
37:46
And so increasing exposure to or, you know, allocating risk to
37:53
Rocket Lab. For me, it's just like, well, I
37:56
kind of own the space sector now.
37:58
So I, I tend to not really own it, but I will trade on time.
38:03
Let's see. What's your current view on
38:06
IREM, which is heavily down today?
38:08
I don't really have a view on the data center names, honestly.
38:13
I, I'm not going to speak to it because I don't, I, I haven't
38:16
followed them. And for me to tell you anything
38:18
would be bad because I'm just not educated on those things.
38:21
But, but yeah, I mean, they're, they're all down.
38:25
They're all down quite heavily. But it's no different than the
38:29
other tech sectors. I mean, you, you can pick almost
38:31
any ticker. It's like Palantir down 13.4%,
38:35
Robin Hood down 10% AMD down 17%.
38:39
I mean, you pick any ticker and it's down.
38:43
Let's see like, yeah, I guess some of these software names
38:47
have bottomed a little bit. But but yeah, I, I don't, I
38:50
mean, I don't have a sorry, I don't have a view there.
38:53
There is Jim Chanos, who who obviously is, is a bear on the
38:58
sector. And I guess he's, you know,
39:00
trying to add more misery by saying, well, if these space
39:03
companies are able to build data centers in space, then the
39:06
terminal value of these data center companies is 0, which is
39:09
absurd, doesn't make any sense. And we're so far away from from
39:13
that becoming a reality, although I think it's going to
39:15
happen. But if you look at these these
39:19
projections of how much compute power, you know, AI applications
39:23
need, then I think I think there will be demand for all these
39:27
data centers here on Earth and in space.
39:29
And obviously it's, it's not going to be a straight line and
39:32
there's going to be bumps along along the way.
39:35
You know, maybe an overbuild. I mean, I think the biggest
39:37
concern that people have is similar to the.com bubble where
39:43
people are overbuilding like optical, optical networks and
39:48
fiber and all this other stuff, because the demand for carrying
39:53
data was like up into the right and it was never ending.
39:55
And then of course, the bubble burst and and all those
39:58
companies got completely demolished.
40:00
I think it's and famous last words, I think it's different
40:03
this time in in the sense that, you know, back then the the
40:08
businesses that were raising money and and you know, they
40:11
were very questionable ideasduringthe.com boom, whether
40:15
it's, you know, selling pet food online or whatever it is, right?
40:18
Whereas I think the I think we all see the real practical use
40:22
of AI today. And so I think it is quite
40:25
different. But but yeah, you're probably
40:27
going to have periods of of overbuild or demand that that is
40:33
overly optimistic. And so there's going to be, you
40:36
know, some pull backs and I think that's quite natural.
40:39
But but yeah, sorry, I don't I don't have a strong view on
40:42
Iran. Let's see.
40:47
What's your read on the market? Are we getting into a bearish
40:50
trend this fall? Today is so crazy.
40:52
What's your new bottom for as TS?
40:53
My average is 70. I don't know, I'm I'm quite
40:57
bullish on space, the space sector.
40:59
I again, I'm not following some of the other sectors as closely.
41:04
You know, can we continue to fall?
41:05
Sure, we could continue to fall. Could we get to 50?
41:09
I don't think so. I think given all the catalysts
41:12
that are lined up and the interest around space and and of
41:17
course the SpaceX IPO, but then the real, the real beat, which
41:20
is launch of commercial service and military, military awards.
41:25
I think, I think we are pretty, I, I think 100 is kind of the
41:30
level, the support level of the company.
41:32
Obviously we're trading just under that which you know, it's,
41:34
it's like anything in and around 100 is, is good to me.
41:38
I remember back in the day when we were all celebrating that 20
41:40
was, was like the new support level, which was back in the
41:45
first part of 2025 that we consolidated there for a really
41:48
long time. I think right now we're kind of
41:51
doing that until some of these other things kick in.
41:53
But but yeah, that are we in a bearish trend?
41:57
I don't think we are for the markets.
41:59
I think there there definitely is movement around where people
42:04
want exposure or not. I mean, for example, you know,
42:07
software, obviously there's a lot of unknowns there and some
42:10
people are selling 1st and figuring out later there's, you
42:15
know, credit. Credit is like a very hot topic
42:18
and, you know, I, I, for better for worse, I own Pagaya, which
42:22
has exposure to the credit markets and there's a lot of
42:25
concerns there around consumer credit.
42:28
And so that stock has taken a pretty big hit.
42:30
But you know, I own warrants and so I'm pretty much set and
42:34
forget on those. I'm still up quite a bit on
42:36
those. But, you know, unless, unless
42:40
things change, you know, the company has continued to execute
42:43
even in the face of all these concerns.
42:46
And so, yeah, we'll see. But I I don't, I don't have a
42:49
negative view of the market. I think these pull backs are
42:53
healthy. And, you know, we have
42:55
obviously, I guess I'll just say a small thing.
42:57
We have a new Fed chair that's potentially coming in and people
43:00
have this view that, you know, this guy has said hawkish stuff
43:03
before and and he's perhaps going to be really bad for the
43:06
market. It's possible.
43:08
I mean, anything's possible, but I think, you know, Donald Trump,
43:14
and I'm not, I'm not trying to be political or anything, but I
43:17
think for him to have picked this chair that, you know, this
43:22
new fetcher probably has to have the same point of view in terms
43:25
of bringing rates down and being somewhat accommodated if even
43:29
though historically that's not been the case.
43:32
And I think some of the. The folks who have pushed back
43:34
and said well, look at. You know, Powell, he, when he
43:37
came in, we thought that he would be friendly to Trump.
43:41
And then, you know, he, he ended up being balanced, which is
43:45
good. Like he was an independent and I
43:47
think. Obviously that was.
43:48
In the first Trump administration, I think this
43:50
time around they've learned, they've learned some lessons.
43:54
And so for him to have nominated the current Fed chair nominee, I
44:01
would assume that that guy is pretty much said like, hey, I'm
44:03
going to be loyal you when you say jump, I'll say, oh, high.
44:07
And so I don't think this guy's going to be hawkish in any way,
44:11
shape or form because I, I think if you look at, for example,
44:16
some of the politicians like Mark Rubio, he went from being
44:21
completely anti Trump to being 100% on board with this
44:24
administration. So, so I don't think, I don't
44:27
think we're heading to a period of, of hawkish fed.
44:30
And, you know, if you look at some of these alternative
44:33
measures for inflation, it looks like inflation still continue to
44:37
come down. The only concern I have is is
44:39
commodities where obviously there's a ton of speculation in
44:43
silver and and gold and some of these other metals, but just
44:46
like crypto and and you're seeing quite a bit of
44:51
speculation taken out of those areas.
44:53
So, so, yeah, I, I'm, I'm actually pretty constructive on
45:00
markets and you know, we're going to India have some of this
45:04
groping around for direction, but I think it's pretty natural.
45:08
And like I said, like as a retail investor, volatility is
45:11
your front. It allows you to get good
45:15
entries. It also allows you, if you're a
45:17
trader or, you know, if, if you're looking to trim things,
45:21
it allows you good exits too. And so, so that's, that's a good
45:24
thing. Does macro impact when a company
45:29
may announce the news or do they typically not care?
45:31
Macro usually does not. Now, that said, like companies
45:34
are aware. And so if there's, if it's a
45:36
really bad time, they might save some news for a better time.
45:41
But in general, I think most companies, and of course,
45:44
they're they're limit there, there are kind of some
45:46
constraints like if they there's material news, then they have to
45:50
release that within a certain period of time.
45:52
And so it may not be up to them. But generally speaking, I think
45:56
most companies, we'll release news as it comes and so, but you
46:01
know, if, if there's some really bad days, then perhaps they they
46:04
might hold off. In a tax advantage count, does
46:10
low cost basis matter more than total share count?
46:12
Considering how IRIS are structured in a tax advantage
46:15
count, your cost basis doesn't really matter.
46:19
It matter in a sense of, you know, picking lots to trade or
46:23
things like that, because what matters is how much money you
46:26
put in the account, your contributions, and then how much
46:29
at the end, you know, when you retire, how much are you taking
46:32
out? And then Uncle Sam gets their
46:33
share. So it doesn't really matter.
46:35
But for tax, for non tax advantage accounts like cash
46:38
accounts, if you are someone who trades stuff around, you need to
46:44
keep very good tabs on your cost basis and how your, I don't know
46:48
your brokerage, whether it does it automatically, but ideally
46:51
you want to have control over what selecting tax lots, right?
46:55
And so I'll give an example like if you have owned AST space
47:00
mobile for many years and your cost basis is five.
47:02
And then let's say like you trade a few shares you, you buy
47:06
a few recently. Let's say you buy some today at
47:08
98 and then maybe a few days from now you're like, OK, I want
47:12
to sell some shares just to monetize some of the gains.
47:15
You absolutely need to go into your into your brokerage app and
47:20
select the shares that you bought for 98.
47:22
Because then if you sell it at 1:10 or 1:20, you're, you're
47:27
going to pay short term tax, but then short term capital gains.
47:30
But it's going to be on a small amount.
47:31
It's going to be for the difference between, you know,
47:33
120 and 98. So that's what that's like 22
47:37
bucks. You want to do that versus
47:40
paying long term capital gains on if your cost basis was 6 and
47:44
you're selling it 120, that's a really big capital gain.
47:48
And even your long term capital gain treatment of that, you're
47:51
still going to pay a pretty hefty chunk, which then you know
47:54
that that's money that comes out of your investment account that
47:58
you would have paid to Uncle Sam.
47:59
And so it's important to manage your tax lots.
48:02
I'm sure most of you guys know this or hopefully you do.
48:04
If you haven't or you don't know, be sure to look up
48:08
information on managing your tax lots.
48:11
Also understand which your what your brokerage, you know what,
48:17
what system they use, because oftentimes you can pick like
48:20
last in first out, first in first out or optimal there
48:24
there's a setting like automatic for maximizing tax efficiency,
48:29
like E*Trade out of that, for example.
48:32
But yeah, that's something that you should certainly pay
48:35
attention to. And there there are times when,
48:37
you know, it might make sense to sell long term capital gains on
48:40
stock because maybe you have a long term capital laws that you
48:44
recognize in the year. And so there's a lot of
48:46
intricacies in managing that. So anyway, I'm going to stop
48:52
there. I just wanted to just check in
48:55
with people. Oh, here's another question.
48:59
What's your take on the delay of shipping the next batch?
49:01
So I've talked about this quite a bit.
49:04
There is a backup down at Cape Canaveral.
49:06
And so you have Artemis that's going on and then the crude
49:11
Dragon Falcon 9 launch that's happening as well.
49:14
And so, and I believe there's like some construction going on.
49:18
So the amount of launch pads and processing facilities that are
49:22
owned by SpaceX are, are limited because they're, they're doing
49:28
some of their own stuff. And obviously we just had this
49:31
or not, we SpaceX had this anomaly with, with one of their
49:35
Falcon 9 rockets. And so they, they have to
49:37
investigate that a bit. So, so, yeah, this is just part
49:40
of owning a space company. We, we will not ship a batch
49:46
down there until they're ready to receive and process it.
49:51
And so, so yeah, it's, it's, we're just waiting for that.
49:54
I mean, obviously the near term, the near term log just going to
49:59
be Blue Origin, New Glenn 3 and FM 2, which will be towards the,
50:04
or no earlier than the end of this month.
50:07
And then I assume it's my, I mean, it's just my base case
50:11
that I think we'll probably get 1-2 additional launches before
50:15
March 3030 first. But so that's four in total.
50:20
But there's a chance like maybe it slips and you get 3 and then
50:23
two come pretty quickly after that.
50:26
And so, yeah, I think, I think that's kind of where we are.
50:30
It is what it is in terms of the, the, the traffic that's
50:34
down there at, at Cape Canaveral.
50:37
And The thing is, is like, you don't want to, you know, throw
50:40
your launch providers into the bus and say, Hey, we, we've,
50:43
we've, we're ready to ship this batch.
50:45
And then but we're going to wait because they can't process it.
50:51
You know, you, you want to be on the good side of whoever you're
50:54
using, whether that's SpaceX or or Blue Origin or Israel for
51:00
now, but that is it. I'm going to end the space
51:05
today. I've got, I had like number of
51:08
things going on and of course our our daughter is, she has a
51:11
fever today unfortunately, but she's feeling better.
51:14
So I need to go and check in on her.
51:15
But but yeah, thanks for joining everyone.
51:18
And yeah, just be calm. Like this is just normal stuff,
51:24
that normal noise in the market to me that it, that is.
51:29
And, and so I think it's important to remember that a lot
51:32
of the stocks that that I assume you're involved in since you're
51:36
listening to this are up pretty significantly for the year.
51:39
And so having these drawdowns happens and it's just a part of
51:44
the process. So anyway, thanks everyone for
51:47
joining and we'll talk again soon.
51:50
Thanks for listening to the AST Space Mover podcast.
51:54
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52:09
next time. We're doing something very, very
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big and I think with this technology we can really affect
52:17
billion lives. AST Space Mobile is the only
52:20
company that has good technology to deliver several mobile
52:25
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52:29
Smart people will just basically turn their phone and be syllabus
52:33
regardless of where you are. We don't want the user even to
52:36
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52:38
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52:41
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52:56
Waffles.